Maybe you’re wondering how an ERP improves compliance? Perhaps you’re scratching your head and trying to figure out what an ERP (enterprise resource planning) system has to do with accounting compliance. The truth is quite a lot. This is because an ERP increases the visibility, security, and traceability of your data.
Although an ERP can’t guarantee compliance, it is an invaluable asset for any company trying to consistently achieve compliance. Accounting standards are regularly updated to include new compliance regulations. Recently, increasingly prevalent billing structures like subscription billing or complex lease management mean compliance has become more complex. As a result, it can become harder and harder to ensure you’re ticking all the right boxes.
That’s where an ERP comes in. Reduce the time your team needs to spend on tasks that can easily be automated and manage all the moving parts that end up impacting compliance. In addition, you will also increase efficiency across your company’s numerous processes.
Here are just some of the ways an ERP improves compliance:
1. Gives your company visibility and transparency
Compliance depends heavily on the ability to visibly and transparently manage business processes. One of the biggest struggles companies face is accurate revenue reporting and recognition. The increase in complex billing structures have only added to the complications of accurate and transparent reporting.
Traditionally, this type of data might be tracked in a complicated network of spreadsheets, often reliant on a small specialized team to put in long hours of manual and boring data entry. We know manual data entry can be riddled with errors due to its monotonous nature. Not only is this labour intensive, but it can be overwhelming to extract the data needed. All of this can easily be managed within an ERP system.
2. An ERP improves compliance by reducing errors in your data
Automating repetitive tasks with an ERP system not only reduces errors but frees up your team. Giving your team the time to triple-check all compliance requirements. It’s hard to prove compliance when there are errors in data tracking and management. Manual data entry can also lead to the sorts of mistakes that can cause issues down the line.
An industry-specific ERP changes all that. It gives you the tools to streamline processes and set up universal standards for how records are saved and stored. As a result, you have more control over your data and can retain historicals, all within a single system. Therefore cutting down on the opportunity for error and making your data more reliable.
3. Better handles complex billing cycles
As touched on briefly above, an ERP will simplify even the most complex billing cycles. If you’re managing a recurring billing model, it’s possible to find an ERP system with built-in tools to make compliance easier. Automating your processes and streamlining your data will give you fast and effective access to reports.
4. Makes your data audit-friendly
Centralized and easily accessible reports streamline your end-of-period process and audits and help you get the right answers at the right time. An ERP allows you to perform audits quickly and efficiently without having to scramble to find the relevant data. This makes your accounting team’s life easier during pressurized times of the year (like tax season). It also gives them peace of mind when they can rely on the consistency and accuracy of the data they’re using. There’s nothing worse than having to spend valuable time and energy re-entering data that could have been automated.
5. Consistent reporting across multiple companies in your ERP improves compliance
The bigger your company gets, and the more properties you manage, the more complicated compliance gets. An ERP will introduce consistency to your reports across multiple entities or companies. As a result, it facilitates your compliance with more accessible data across all entities. Investing in an ERP that is built to scale as your company grows will be essential for fast-growing companies as it will enable you to keep track of data and remain compliant as you expand.
Finally, an industry-specific ERP improves compliance by knowing your industry better than you do
A company with a system built for your industry has probably worked with hundreds of companies with similar needs to you. When it comes to compliance there are going to be a number of commonalities between companies, and even more so, between those in the same industry. Investing the little extra needed to ensure your tools are built to handle the demands of your industry and ensure that your accounts are all in order, will save you time and money in the future.
Often, we see companies who’ve tried to use complicated workarounds with systems that haven’t been proven to work in their industry. Do your research and find an ERP that knows your industry or has add-ons specific to your industry. That way it will be built to tackle the complexities of the processes you need to make visible and transparent.